How to Budget for Employee Appreciation

How to Budget for Employee Appreciation

It doesn’t take much to recognise when an employee has done a good job. Even simple thank you notes can often create the biggest smile!

 Thank you text on a card

But sometimes (we think, all the time!) it’s worth putting in a little extra time and effort to establish a good employee recognition culture in the workplace.

 

Employee recognition is renowned for being one of the most important factors in driving workplace engagement, productivity and employee retention. In fact, the results from a recent study showed that over 90% of employees across the UK say that recognition is important to them and 72% saying they would work harder if they were appreciated with a comprehensive staff appreciation programme.

 

If reading that isn’t enough motivation to up your employee appreciation game and create a more positive company culture – we don’t know what is!

 

It’s time for all employers to embrace a new employee appreciation program, but it doesn’t have to be elaborate, difficult to organise or expensive. The most common question from employers looking to increase their employee appreciation is:

 

How much should you spend on employee recognition?

 

Let’s talk money….A great way to get started on a company recognition program is by setting a recognition budget. Without a clear plan and budget for employee recognition the efforts might end up being lost. After all, if you’re missing clear objectives for the rewards, or no controlled distribution or tracking, it’s highly likely that the money and time that you spend will  end up being counterproductive to the cause as it might not align with any corporate goals or culture.  

 

There isn’t a one-size-fits-all way to do this, but there are some important factors to consider when you’re taking the first steps to increasing employee engagement and improving your employee retention. Firstly, let’s take a look at our top-three fun and engaging types of recognition programs.

Piggy Bank

 

Types of Employee Recognition Programs

1.  Online Recognition

This type of employee recognition is a great way to engage and motivate remote teams. You could opt to use a digital program or app where employees can view recognition, praise and appreciation in one place. This way of showing employee appreciation has already shown positive results amongst millennials, with companies seeing an increase in engagement amongst this demographic. 

Not only is it a great way for employees to receive recognition, but employees may also feel more comfortable giving peer recognition across a social platform. Peer recognition is hugely effective in improving employee engagement, and builds a more positive company culture.

2.  Points-based Rewards

A points-based rewards system works by rewarding employees in real-time after motivating them to perform well. Employees might be able to use points to choose rewards they’ve been looking forward to or be gifted with a surprise. Either way, a points-based system is a form of performance recognition that could be used to increase employee engagement, participation and good behaviour.

You can even include recognition from your customers as part of your points-based rewards system. After an employee has engaged with a customer, perhaps after their support ticket has been resolved, you can ask for their feedback and give them the opportunity to reward the team member with points. Not only will this motivate your employees by being rewarded for their efforts, but you’ll also get a peek into how satisfied your customers are. A double win!

3.  Competitions and Awards

A little bit of healthy competition never hurts, infact, encouraging friendly competition could really help drive your company success and inspire employees. Whether you take a collective approach, or everyone goes solo, competitions are a fun and easy way to boost your recognition. Either way, healthy competition can encourage team members to work towards a common goal, incentivizing them with a prize or award at the finish line.

 

Okay, so – you’ve picked an employee recognition program that aligns with your company values, and you know it will make your employees feel appreciated. Now it’s time to set your recognition budget!

 

How do you budget for employee recognition programs?

1.  Outline ‘Why’ You Want to Recognise Your Employees

It may seem obvious, because you know you want to increase recognition to foster more employee engagement and a positive workplace culture for your team – but identifying clear goals is key to making your employee recognition program a roaring success. 

An authentic and well constructed recognition program goes deeper to align with the organisation’s visions and values. By taking it to the next level, appreciation can be shown and rewarded for specific success and projects that facilitate the company’s goals. This means assigning each role and pinpointing when it would be beneficial for the employee and the company to reward them for their work

 

If you’re rewarding employees for activities that conflict with these goals, it will hinder the growth and evolution of the business. This means money isn’t being spent effectively and it can result in your employees being confused and having an adverse effect on morale and motivation.

 

2.  Identify New and Existing Costs

It’s likely you’ve already spent money on recognition, you’re not a monster after all, but without a formal recognition budget, these costs could reach counter-productive levels. Look at how much money you already spend, taking things like free event tickets, team celebration events and paid lunches into consideration.

 

Once you’ve identified these costs, it will be easier to implement your new employee recognition plan with assigned budgets for departments if needed. Bringing existing costs together with what you want to spend will ensure the recognition program still aligns with the organisational goals and will start you on the right path to track your spending.

If you need a little helping hand in knowing how much is enough, we would always suggest that your annual appreciation budget sits anywhere between 1-5% of the costs of your total annual salary costs.  

 

3.  Make Sure Recognition is Company Wide

No one likes to be left out. That’s why it’s important to make sure your employee recognition program stretches across the whole company. Not only will this have a bigger impact on the company culture as a whole, but it will also encourage involvement and engagement with employees to show some recognition of their own. When employees adopt the ability to recognise each other, it can reinforce the idea that they should be aspiring to be advocates for the business. You want the team to feel connected to the business both collectively and individually

 

4.  Factor in Time for Administration

Running a successful employee appreciation program will only become overwhelming if you don’t plan it all. It’s not difficult work, but it does still take time to set up and organise. Tracking expenses, gathering birthdays and important employee dates or even sitting down to order prizes and gifts, if properly scheduled into the working day it will make your recognition programme run smoothly and become much less daunting.

Remember, it’s likely that once you’ve gone through your set-up process, the amount of time that you will need to spend managing the program will be significantly less than getting it started. Think about your employee’s journey, looking at their onboarding process and factoring in your company recognition program as part of this process to improve efficiency!   

 

5.  Review According to Tax Law and Legal Requirements

This step is an essential requirement of any successful recognition program. It’s advised that you confirm any plans for your budget for employee recognition with your accountant or advisor.

It’s also crucial to remember that recognition programs must be enrolled equally amongst employees regardless of race, sexuality, religion and other minority statuses to avoid discrimination.

 

These are some budget considerations for your recognition program that will help you create a more meaningful appreciation program that employees need.

 

No matter what type of recognition you go for it will take some thought and consideration, but the effort you put into planning and budgeting for your recognition program will be worth it. Learning How to Up Your Employee Recognition Game in 2021 will help retainment through cultivating a positive working environment and showing your employees just how much you care.

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